false000172895100017289512022-07-282022-07-28




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

July 28, 2022
Date of Report (Date of earliest event reported)

Essential Properties Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland
001-38530
82-4005693
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
902 Carnegie Center Blvd., Suite 520
Princeton, New Jersey
08540
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:
(609) 436-0619




Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act 17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, $0.01 par valueEPRTNew York Stock Exchange
    

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐




Item 2.02 — Results of Operations and Financial Condition.
On July 28, 2022, Essential Properties Realty Trust, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the three and six months ended June 30, 2022. The press release is furnished hereto as Exhibit 99.1 and incorporated herein by reference.

Item 7.01— Regulation FD Disclosure.
On July 28, 2022, the Company issued its Supplemental Operating & Financial Data—Second Quarter Ended June 30, 2022. The Supplemental Operating & Financial Data is furnished hereto as Exhibit 99.2 and incorporated herein by reference.
The foregoing information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition,” and Item 7.01, “Regulation FD Disclosure.” The information in Items 2.02 and 7.01 of this Current Report on Form 8-K and the exhibits furnished therewith shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, and shall not be or be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.

Item 9.01 — Financial Statements and Exhibits.
(d) Exhibits.

Exhibit No.Description
Earnings Press Release dated July 28, 2022 for the quarter ended June 30, 2022
Supplemental Operating & Financial Data—Second Quarter Ended June 30, 2022
104Cover Page Interactive Data File (embedded within the Inline XBRL document)











SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 28, 2022
ESSENTIAL PROPERTIES REALTY TRUST, INC.
By:/s/ Mark E. Patten
Mark E. Patten
Executive Vice President, Chief Financial Officer, Treasurer, and Secretary
(Principal Financial Officer)

Exhibit 99.1

image_0a.jpg
Essential Properties Announces Second Quarter 2022 Results
- Second Quarter Net Income per Share of $0.27 and AFFO per Share of $0.38 -
- Closed Investments of $175.7 million at a 7.0% Weighted Average Cash Cap Rate -
- Increases 2022 AFFO Guidance to $1.52 to $1.54 per Share -

July 28, 2022
PRINCETON, N.J.--(BUSINESS WIRE)--Essential Properties Realty Trust, Inc. (NYSE: EPRT; “Essential Properties” or the “Company”) today announced operating results for the three and six months ended June 30, 2022.
Second Quarter 2022 Financial and Operating Highlights:
Operating Results (compared to Second Quarter 2021):
Investments (39 properties)
$ Invested
$175.7 million
Weighted Avg Cash Cap Rate
7.0%
Dispositions (8 properties)
Net Proceeds
$26.1 million
Weighted Avg Cash Cap Rate
6.2%
Net Income per Share
Increased by 35%
$0.27
Funds from Operations ("FFO") per Share
Increased by 28%
$0.41
Core Funds from Operations ("Core FFO") per Share
Increased by 17%
$0.41
Adjusted Funds from Operations ("AFFO") per Share
Increased by 12%
$0.38
Equity Activity:
Equity Raised (Gross) - ATM Program
$21.74/share
$32.6 million

Year to Date 2022 Financial and Operating Highlights:
Operating Results (compared to YTD Second Quarter 2021):
Investments (144 properties)
$ Invested
$413.5 million
Weighted Avg Cash Cap Rate
7.0%
Dispositions (14 properties)
Net Proceeds
$44.5 million
Weighted Avg Cash Cap Rate
6.6%
Net Income per share
Increased by 41%
$0.48
FFO per share
Increased by 32%
$0.79
Core FFO per share
Increased by 27%
$0.81
AFFO per share
Increased by 23%
$0.76
Equity Activity:
Equity Raised (Gross) - ATM Program
$24.39/share
$192.3 million

Highlights Subsequent to Second Quarter 2022:
Investments (6 properties)
$ Invested
$45.7 million
Equity & Debt Activity:
Equity Raised (Gross) - ATM Program
$21.57/share$20.5 million
New 2028 Term Loan
5.5 Year Tenor; Adjusted Term SOFR + 95 bps$400.0 million






CEO Comments

Commenting on the second quarter 2022 results, the Company's President and Chief Executive Officer, Pete Mavoides, said, “The portfolio’s strong operating performance continued into the second quarter with high occupancy, solid same-store rent growth, and increased unit-level coverage.” Mr. Mavoides continued, "Despite a challenging capital market environment, our established tenant relationships and direct origination process allowed us to invest at favorable yields once again this quarter. With a robust investment pipeline and our well-priced debt execution recharging our low-levered balance sheet for growth, we are increasing our 2022 AFFO per share guidance to $1.52 to $1.54."

Portfolio Update
Investments
The Company’s investment activity during the three and six months ended June 30, 2022 is summarized as follows:
Quarter Ended
June 30, 2022
Year to Date
June 30, 2022
Investments:
$ Invested
$175.7 million
$413.5 million
# of Properties39144
# of Separate Transactions2346
Weighted Average Cash / GAAP Cap Rate
  7.0%/8.0%
  7.0%/7.9%
Weighted Average Lease Term (WALT)
17.2 years
15.9 years
% Sale-Leaseback Transactions
100%
100%
% Subject to Master Lease
86%
84%
% Required Financial Reporting (tenant/guarantor)
100%
100%
Dispositions
The Company’s disposition activity during the three and six months ended June 30, 2022 is summarized as follows:
Quarter Ended
June 30, 2022
Year to Date
June 30, 2022
Dispositions:
Net Proceeds
$26.1 million
$44.5 million
# of Properties Sold814
Net Gain / (Loss)
$10.1 million
$11.8 million
Weighted Average Cash Cap Rate (excluding vacant properties and sales subject to a tenant purchase option )
6.2%
6.6%
Loan Repayments
Loan repayments to the Company during the three and six months ended June 30, 2022 are summarized as follows:
Quarter Ended
June 30, 2022
Year to Date
June 30, 2022
Proceeds—Principal$37.8 million$48.4 million
Proceeds—Prepayment Penalties$0.3 million$0.4 million
# of Properties1520
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Portfolio Highlights
The Company’s investment portfolio as of June 30, 2022 is summarized as follows:
Number of properties
1,561
WALT
13.8 years
Weighted average rent coverage ratio
4.0x
Number of tenants
322
Number of states
46
Number of industries
16
Weighted average occupancy
99.9%
Total square feet of rentable space
14,401,377
Cash ABR - service-oriented or experience-based
93.1%
Cash ABR - properties subject to master lease
63.8%
Leverage and Balance Sheet and Liquidity
The Company's leverage, balance sheet and liquidity are summarized in the following table.
June 30, 2022
Leverage:
Net debt to Annualized Adjusted EBITDAre
4.7x
Balance Sheet and Liquidity:
Cash and cash equivalents and restricted cash
$26.2 million
Unused borrowing capacity
$382.0 million
Total available liquidity
$408.2 million
ATM Program:
2022 ATM Program initial availability$500.0 million
Aggregate gross sales under the 2022 ATM Program
$32.6 million
Availability remaining under the 2022 ATM Program
$467.4 million
Average price per share of gross sales to date
$21.74
Subsequent Debt Activity
In July 2022, the Company entered into a new term loan permitting up to $400.0 million of borrowings. The below table provides a summary of this new debt agreement.
2028 Term Loan
Maturity DateJanuary 2028
Initial Principal Drawn$250.0 million
Maximum Available Principal$400.0 million
Delayed Draw Period90 Days
Interest Rate
Adjusted Term SOFR + 95 bps(1)
image_7a.jpg
1.Includes 10 bps SOFR premium adjustment.
Dividend Information
As previously announced, on June 2, 2022 Essential Properties' board of directors declared a cash dividend of $0.27 per share of common stock for the quarter ended June 30, 2022. The dividend was paid on July 14, 2022 to stockholders of record as of the close of business on June 30, 2022.
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Guidance
2022 Guidance
The Company is increasing its expectation that 2022 AFFO per share on a fully diluted basis will be within a range of $1.52 to $1.54 from its previously announced range of $1.50 to $1.53.
Note: The Company does not provide guidance for the most comparable GAAP financial measure, net income, or a reconciliation of the forward-looking non-GAAP financial measure of AFFO to net income computed in accordance with GAAP, because it is unable to reasonably predict, without unreasonable efforts, certain items that would be contained in the GAAP measure, including items that are not indicative of the Company's ongoing operations, such as, without limitation, potential impairments of real estate assets, net gain/loss on dispositions of real estate assets, changes in allowance for credit losses and stock-based compensation expense. These items are uncertain, depend on various factors, and could have a material impact on the Company's GAAP results for the guidance periods.
Conference Call Information
In conjunction with the release of Essential Properties’ operating results, the Company will host a conference call on Friday, July 29, 2022 at 11:00 a.m. EDT to discuss the results. To access the conference, dial 877-407-9208 (International: 201-493-6784). A live webcast will also be available in listen-only mode by clicking on the webcast link in the Investor Relations section at www.essentialproperties.com.
A telephone replay of the conference call can also be accessed by calling 844-512-2921 (International: 412-317-6671) and entering the access code: 13731457. The telephone replay will be available through August 12, 2022.

A replay of the conference call webcast will be available on our website approximately two hours after the conclusion of the live broadcast. The webcast replay will be available for 90 days. No access code is required for this replay.
Supplemental Materials
The Company’s Supplemental Operating & Financial Data—Second Quarter Ended June 30, 2022 is available on Essential Properties’ website at investors.essentialproperties.com.
About Essential Properties Realty Trust, Inc.
Essential Properties Realty Trust, Inc. is an internally managed REIT that acquires, owns and manages primarily single- tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. As of June 30, 2022, the Company’s portfolio consisted of 1,561 freestanding net lease properties with a weighted average lease term of 13.8 years and a weighted average rent coverage ratio of 4.0x. In addition, as of June 30, 2022, the Company’s portfolio was 99.9% leased to 322 tenants operating 469 different concepts in 16 industries across 46 states.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. When used in this press release, the words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and the Company may not be able to realize them. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. While forward-looking statements reflect the Company’s good faith beliefs, they are not guarantees of future performance. The Company
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undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law. In light of these risks and uncertainties, the forward-looking events discussed in this press release might not occur as described, or at all.
Additional information concerning factors that could cause actual results to differ materially from these forward-looking statements is contained in the company’s Securities and Exchange Commission (the "Commission”) filings, including, but not limited to, the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Copies of each filing may be obtained from the Company or the Commission. Such forward-looking statements should be regarded solely as reflections of the Company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release.
The results reported in this press release are preliminary and not final. There can be no assurance that these results will not vary from the final results reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 that it will file with the Commission.
Non-GAAP Financial Measures and Certain Definitions
The Company’s reported results are presented in accordance with GAAP. The Company also discloses the following non-GAAP financial measures: FFO, Core FFO, AFFO, earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) on sales of depreciable property and real estate impairment losses (“EBITDAre”), adjusted EBITDAre, annualized adjusted EBITDAre, net debt, net operating income (“NOI”) and cash NOI (“Cash NOI”). The Company believes these non-GAAP financial measures are industry measures used by analysts and investors to compare the operating performance of REITs.
FFO, Core FFO and AFFO
The Company computes FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO is used by management, and may be useful to investors and analysts, to facilitate meaningful comparisons of operating performance between periods and among the Company’s peers primarily because it excludes the effect of real estate depreciation and amortization and net gains and losses on sales (which are dependent on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions).
The Company computes Core FFO by adjusting FFO, as defined by NAREIT, to exclude certain GAAP income and expense amounts that it believes are infrequent and unusual in nature and/or not related to its core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods and in comparison to the operating performance of our peers, because it removes the effect of unusual items that are not expected to impact our operating performance on an ongoing basis.
Core FFO is used by management in evaluating the performance of our core business operations. Items included in calculating FFO that may be excluded in calculating Core FFO include certain transaction related gains, losses, income or expense or other non-core amounts as they occur.
To derive AFFO, the Company modifies its computation of Core FFO to include other adjustments to GAAP net income related to certain items that it believes are not indicative of the Company’s operating performance, including straight-line rental revenue, non-cash interest expense, non-cash compensation expense, other amortization expense, other non-cash charges (including changes to our provision for loan losses following the adoption of ASC 326), capitalized interest expense and transaction costs. Such items may cause short-term fluctuations in net income but have no impact on
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operating cash flows or long-term operating performance. The Company believes that AFFO is an additional useful supplemental measure for investors to consider when assessing the Company’s operating performance without the distortions created by non-cash items and certain other revenues and expenses.
FFO, Core FFO and AFFO do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of FFO, Core FFO and AFFO may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.
EBITDA and EBITDAre
The Company computes EBITDA as earnings before interest, income taxes and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. The Company computes EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses. The Company presents EBITDA and EBITDAre as they are measures commonly used in its industry and the Company believes that these measures are useful to investors and analysts because they provide supplemental information concerning its operating performance, exclusive of certain non-cash items and other costs. The Company uses EBITDA and EBITDAre as measures of its operating performance and not as measures of liquidity.
EBITDA and EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, the Company’s computation of EBITDA and EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.
Net Debt
The Company calculates its net debt as its gross debt (defined as total debt plus net deferred financing costs on its secured borrowings) less cash and cash equivalents and restricted cash available for future investment. The Company believes excluding cash and cash equivalents and restricted cash available for future investment from gross debt, all of which could be used to repay debt, provides an estimate of the net contractual amount of borrowed capital to be repaid, which it believes is a beneficial disclosure to investors and analysts.
NOI and Cash NOI
The Company computes NOI as total revenues less property expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income or loss. Cash NOI further excludes non-cash items included in total revenues and property expenses, such as straight-line rental revenue and other amortization and non-cash charges. The Company believes NOI and Cash NOI provide useful information because they reflect only those revenue and expense items that are incurred at the property level and present such items on an unlevered basis.
NOI and Cash NOI are not measures of financial performance under GAAP. You should not consider the Company’s NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. Additionally, the Company’s computation of NOI and Cash NOI may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.
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Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI
The Company further adjusts EBITDAre, NOI and Cash NOI i) based on an estimate calculated as if all investment and disposition activity that took place during the quarter had occurred on the first day of the quarter, ii) to exclude certain GAAP income and expense amounts that the Company believes are infrequent and unusual in nature and iii) to eliminate the impact of lease termination or loan prepayment fees and contingent rental revenue from its tenants which is subject to sales thresholds specified in the lease. The Company then annualizes these estimates for the current quarter by multiplying them by four, which it believes provides a meaningful estimate of the Company’s current run rate for all investments as of the end of the current quarter. You should not unduly rely on these measures, as they are based on assumptions and estimates that may prove to be inaccurate. The Company’s actual reported EBITDAre, NOI and Cash NOI for future periods may be significantly less than these estimates of current run rates.
Cash ABR
Cash ABR means annualized contractually specified cash base rent in effect as of the end of the current quarter for all of the Company’s leases (including those accounted for as direct financing leases) commenced as of that date and annualized cash interest on its mortgage loans receivable as of that date.
Cash Cap Rate
Cash Cap Rate means annualized contractually specified cash base rent for the first full month after investment or disposition divided by the purchase or sale price, as applicable, for the property.
GAAP Cap Rate
GAAP Cap Rate means annualized rental income computed in accordance with GAAP for the first full month after investment divided by the purchase price, as applicable, for the property.
Rent Coverage Ratio
Rent coverage ratio means the ratio of tenant-reported or, when unavailable, management’s estimate based on tenant-reported financial information, annual EBITDA and cash rent attributable to the leased property (or properties, in the case of a master lease) to the annualized base rental obligation as of a specified date.
Disclaimer
Essential Properties Realty Trust, Inc. and the Essential Properties Realty Trust REIT are not affiliated with or sponsored by Griffin Capital Essential Asset Operating Partnership, L.P. or the Griffin Capital Essential Asset REIT, information about which can be obtained at (https://www.gcear.com).
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Essential Properties Realty Trust, Inc.
Consolidated Statements of Operations

Three months ended June 30,Six months ended June 30,
(in thousands, except share and per share data)2022202120222021
(unaudited)(unaudited)(unaudited)(unaudited)
Revenues:
Rental revenue1,2
$67,089 $53,150 $133,201 $98,582 
Interest on loans and direct financing lease receivables
3,949 3,879 7,771 6,984 
Other revenue408 37 595 52 
Total revenues71,446 57,066 141,567 105,618 
Expenses:
General and administrative
7,026 6,470 15,089 12,901 
Property expenses3
828 1,174 1,837 2,588 
Depreciation and amortization22,074 17,184 42,387 32,830 
Provision for impairment of real estate6,258 398 10,193 6,120 
Change in provision for loan losses107 (166)167 (128)
Total expenses36,293 25,060 69,673 54,311 
Other operating income:
Gain on dispositions of real estate, net10,094 3,710 11,752 7,498 
Income from operations45,247 35,716 83,646 58,805 
Other (expense)/income:
Loss on debt extinguishment4
— (4,461)(2,138)(4,461)
Interest expense(9,190)(7,811)(18,350)(15,489)
Interest income30 17 48 37 
Income before income tax expense36,087 23,461 63,206 38,892 
Income tax expense275 61 576 117 
Net income35,812 23,400 62,630 38,775 
Net income attributable to non-controlling interests(159)(116)(278)(196)
Net income attributable to stockholders$35,653 $23,284 $62,352 $38,579 
Basic weighted-average shares outstanding131,271,882 116,318,386 129,068,197 111,678,562 
Basic net income per share$0.27 $0.20 $0.48 $0.34 
Diluted weighted-average shares outstanding132,019,501 117,513,344 129,983,198 112,770,501 
Diluted net income per share$0.27 $0.20 $0.48 $0.34 
image_7a.jpg
1.Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $159, $62 ,$315 and $231 for the three and six months ended June 30, 2022 and 2021, respectively.
2.Includes reimbursable income from the Company’s tenants of $501, $399, $1,054 and $852 for the three and six months ended June 30, 2022 and 2021, respectively.
3.Includes reimbursable expenses from the Company’s tenants $500, $399, $1,054 and $852 for the three and six months ended June 30, 2022 and 2021, respectively.
4.During the six months ended June 30, 2022, includes debt extinguishment costs associated with the Company's restructuring of its credit and term loan facilities and, during the three and six months ended June 30, 2021, includes debt extinguishment costs associated with the full repayment of the Company's remaining secured debt.
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Essential Properties Realty Trust, Inc.
Consolidated Balance Sheets

(in thousands, expect share and per share amounts)June 30, 2022December 31, 2021
(Unaudited)(Audited)
ASSETS
Investments:
Real estate investments, at cost:
Land and improvements$1,124,147 $1,004,154 
Building and improvements2,212,212 2,035,919 
Lease incentive14,005 13,950 
Construction in progress22,147 8,858 
Intangible lease assets86,575 87,959 
Total real estate investments, at cost3,459,086 3,150,840 
Less: accumulated depreciation and amortization(238,402)(200,152)
Total real estate investments, net3,220,684 2,950,688 
Loans and direct financing lease receivables, net194,963 189,287 
Real estate investments held for sale, net21,787 15,434 
Net investments3,437,434 3,155,409 
Cash and cash equivalents17,993 59,758 
Restricted cash8,221 — 
Straight-line rent receivable, net70,741 57,990 
Derivative assets27,645 — 
Rent receivables, prepaid expenses and other assets, net25,442 25,638 
Total assets$3,587,476 $3,298,795 
LIABILITIES AND EQUITY
Unsecured term loans, net of deferred financing costs$628,209 $626,983 
Senior unsecured notes, net395,005 394,723 
Revolving credit facility218,000 144,000 
Intangible lease liabilities, net12,305 12,693 
Dividend payable36,066 32,610 
Derivative liabilities123 11,838 
Accrued liabilities and other payables29,794 32,145 
Total liabilities1,319,502 1,254,992 
Commitments and contingencies— — 
Stockholders' equity:
Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of June 30, 2022 and December 31, 2021
— — 
Common stock, $0.01 par value; 500,000,000 authorized; 132,669,947 and 124,649,053 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
1,327 1,246 
Additional paid-in capital2,346,037 2,151,088 
Distributions in excess of cumulative earnings(110,969)(100,982)
Accumulated other comprehensive loss24,134 (14,786)
Total stockholders' equity2,260,529 2,036,566 
Non-controlling interests7,445 7,237 
Total equity2,267,974 2,043,803 
Total liabilities and equity$3,587,476 $3,298,795 

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Essential Properties Realty Trust, Inc.
Reconciliation of Non-GAAP Financial Measures

Three months ended June 30,Six months ended June 30,
(unaudited, in thousands except per share amounts)2022202120222021
Net income$35,812 $23,400 $62,630 $38,775 
Depreciation and amortization of real estate22,048 17,158 42,335 32,779 
Provision for impairment of real estate6,258 398 10,193 6,120 
Gain on dispositions of real estate, net(10,094)(3,710)(11,752)(7,498)
Funds from Operations54,024 37,246 103,406 70,176 
Other non-recurring expenses1
— 4,461 2,138 4,461 
Core Funds from Operations54,024 41,707 105,544 74,637 
Adjustments:
Straight-line rental revenue, net(6,535)(5,220)(12,801)(8,864)
Non-cash interest expense689 417 1,350 896 
Non-cash compensation expense2,188 1,856 5,024 3,451 
Other amortization expense208 1,315 402 2,420 
Other non-cash charges104 (168)160 (132)
Capitalized interest expense(61)(15)(127)(35)
Adjusted Funds from Operations$50,617 $39,892 $99,552 $72,373 
Net income per share2:
Basic$0.27 $0.20 $0.48 $0.34 
Diluted$0.27 $0.20 $0.48 $0.34 
FFO per share2:
Basic$0.41 $0.32 $0.80 $0.60 
Diluted$0.41 $0.32 $0.79 $0.60 
Core FFO per share2:
Basic$0.41 $0.35 $0.81 $0.64 
Diluted$0.41 $0.35 $0.81 $0.64 
AFFO per share2:
Basic$0.38 $0.34 $0.77 $0.62 
Diluted$0.38 $0.34 $0.76 $0.62 
image_6a.jpg
1.During the six months ended June 30, 2022, includes debt extinguishment costs associated with the Company's restructuring of its credit and term loan facilities and, during the three and six months ended June 30, 2021, includes debt extinguishment costs associated with the full repayment of the Company's remaining secured debt.
2.Calculations exclude $97, $68, $187 and $187 from the numerator for the three and six months ended June 30, 2022 and 2021, respectively, related to dividends paid on unvested restricted share awards and restricted share units.
10


Essential Properties Realty Trust, Inc.
Reconciliation of Non-GAAP Financial Measures


(in thousands)
Three months ended June 30, 2022
Net income$35,812 
Depreciation and amortization22,074 
Interest expense9,190 
Interest income(30)
Income tax expense275 
EBITDA67,321 
Provision for impairment of real estate6,258 
Gain on dispositions of real estate, net(10,094)
EBITDAre
63,485 
Adjustment for current quarter re-leasing, acquisition and disposition activity1
2,497 
Adjustment to exclude other non-core or non-recurring activity2
(58)
Adjustment to exclude termination/prepayment fees and certain percentage rent3
(276)
Adjusted EBITDAre - Current Estimated Run Rate
65,648 
General and administrative7,026 
Adjusted net operating income ("NOI")72,674 
Straight-line rental revenue, net1
(5,787)
Other amortization expense208 
Adjusted Cash NOI$67,095 
Annualized EBITDAre
$253,940 
Annualized Adjusted EBITDAre
$262,592 
Annualized Adjusted NOI$290,696 
Annualized Adjusted Cash NOI$268,380 
image_7a.jpg
1.These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all investments, dispositions and re-leasing activity of real estate made during the three months ended June 30, 2022 had occurred on April 1, 2022.
2.Adjustment is made to exclude non-core expenses added back to compute Core FFO, our provision for loan losses and to eliminate the impact of seasonal fluctuation in certain non-cash compensation expense recorded in the period.
3.Adjustment excludes contingent rent (based on a percentage of the tenant's gross sales at the leased property) where payment is subject to exceeding a sales threshold specified in the lease and lease termination or loan prepayment fees, if any.

11


Essential Properties Realty Trust, Inc.
Reconciliation of Non-GAAP Financial Measures

(dollars in thousands, except share and per share amounts)June 30, 2022
Unsecured debt:
2024 term loan$200,000
2027 term loan430,000
Senior unsecured notes400,000
Revolving credit facility1
218,000
Total unsecured debt1,248,000
Gross debt1,248,000
Less: cash & cash equivalents(17,993)
Less: restricted cash available for future investment(8,221)
Net debt1,221,786
Equity:
Preferred stock
Common stock & OP units (133,223,794 shares @ $21.49/share as of 6/30/22)2
2,862,979
Total equity2,862,979
Total enterprise value ("TEV")$4,084,765
Net Debt / TEV29.9 %
Net Debt / Annualized Adjusted EBITDAre
4.7x
image_7a.jpg
1.The Company’s revolving credit facility provides a maximum aggregate initial original principal amount of up to $600 million and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to an additional $600 million.
2.Common equity & units as of June 30, 2022, based on 132,669,947 common shares outstanding (including unvested restricted share awards) and 553,847 OP units held by non-controlling interests.
12


Investor/Media:

Essential Properties Realty Trust, Inc.
Daniel Donlan, Senior Vice President, Capital Markets
609-436-0619
info@essentialproperties.com

Source: Essential Properties Realty Trust, Inc.
13
Supplemental Operating & Financial Data Second Quarter Ended June 30, 2022 Exhibit 99.2


 
Supplemental Financial and Operating Information | As of June 30, 20221 Table of Contents Financial Summary Consolidated Statements of Operations 2 Funds from Operations and Adjusted Funds from Operations 3 Consolidated Balance Sheets 4 GAAP Reconciliations to EBITDAre, GAAP NOI and Cash NOI 5 Market Capitalization, Debt Summary and Leverage Metrics 6 Net Investment Activity Investment Summary 7 Disposition Summary 8 Portfolio Summary Portfolio Highlights 9 Tenant and Industry Diversification 10 Portfolio Health 11 Leasing Summary Leasing Expiration Schedule, Leasing Activity and Statistics 12 Same-Store Analysis 13 Lease Escalations 14 Glossary 15-17


 
Supplemental Financial and Operating Information | As of June 30, 20222 1. Includes contingent rent (based on a percentage of the tenant's gross sales at the leased property) of $159, $62, $315 and $231 for the three and six months ended June 30, 2022 and 2021, respectively. 2. Includes reimbursable income from the Company’s tenants of $501, $399, $1,054 and $852 for the three and six months ended June 30, 2022 and 2021, respectively. 3. Includes reimbursable expenses from the Company’s tenants of $500, $399, $1,054, and $852 for the three and six months ended June 30, 2022 and 2021, respectively. 4. During the six months ended June 30, 2022, includes debt extinguishment costs associated with the Company's restructuring of its credit and term loan facilities and, during the three and six months ended June 30, 2021, includes debt extinguishment costs associated with the full repayment of the Company's remaining secured debt. Financial Summary Consolidated Statements of Operations Three Months Ended June 30, Six Months Ended June 30, (in thousands, except share and per share data) 2022 2021 2022 2021 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Rental revenue1,2 $ 67,089 $ 53,150 $ 133,201 $ 98,582 Interest on loans and direct financing lease receivables 3,949 3,879 7,771 6,984 Other revenue, net 408 37 595 52 Total revenues 71,446 57,066 141,567 105,618 Expenses: General and administrative 7,026 6,470 15,089 12,901 Property expenses3 828 1,174 1,837 2,588 Depreciation and amortization 22,074 17,184 42,387 32,830 Provision for impairment of real estate 6,258 398 10,193 6,120 Change in provision for loan losses 107 (166) 167 (128) Total expenses 36,293 25,060 69,673 54,311 Other operating income: Gain on dispositions of real estate, net 10,094 3,710 11,752 7,498 Income from operations 45,247 35,716 83,646 58,805 Other (expense)/income: Loss on debt extinguishment4 — (4,461) (2,138) (4,461) Interest expense (9,190) (7,811) (18,350) (15,489) Interest income 30 17 48 37 Income before income tax expense 36,087 23,461 63,206 38,892 Income tax expense 275 61 576 117 Net income 35,812 23,400 62,630 38,775 Net income attributable to non-controlling interests (159) (116) (278) (196) Net income attributable to stockholders $ 35,653 $ 23,284 $ 62,352 $ 38,579 Basic weighted-average shares outstanding 131,271,882 116,318,386 129,068,197 111,678,562 Basic net income per share $ 0.27 $ 0.20 $ 0.48 $ 0.34 Diluted weighted-average shares outstanding 132,019,501 117,513,344 129,983,198 112,770,501 Diluted net income per share $ 0.27 $ 0.20 $ 0.48 $ 0.34


 
Supplemental Financial and Operating Information | As of June 30, 20223 1. During the six months ended June 30, 2022, includes debt extinguishment costs associated with the Company's restructuring of its credit and term loan facilities and, during the three and six months ended June 30, 2021, includes debt extinguisment costs assocated with the full repayment of the Company's remaining secured debt. 2. Calculations exclude $97, $68, $187 and $187 from the numerator for the three and six months ended June 30, 2022 and 2021, respectively, related to dividends paid on unvested restricted share awards and restricted share units. Financial Summary Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) Three months ended June 30, Six months ended June 30, (unaudited, in thousands except per share amounts) 2022 2021 2022 2021 Net income $ 35,812 $ 23,400 $ 62,630 $ 38,775 Depreciation and amortization of real estate 22,048 17,158 42,335 32,779 Provision for impairment of real estate 6,258 398 10,193 6,120 Gain on dispositions of real estate, net (10,094) (3,710) (11,752) (7,498) Funds from Operations 54,024 37,246 103,406 70,176 Other non-recurring expenses1,2 — 4,461 2,138 4,461 Core Funds from Operations 54,024 41,707 105,544 74,637 Adjustments: Straight-line rental revenue, net (6,535) (5,220) (12,801) (8,864) Non-cash interest expense 689 417 1,350 896 Non-cash compensation expense 2,188 1,856 5,024 3,451 Other amortization expense 208 1,315 402 2,420 Other non-cash charges 104 (168) 160 (132) Capitalized interest expense (61) (15) (127) (35) Adjusted Funds from Operations $ 50,617 $ 39,892 $ 99,552 $ 72,373 Net income per share3: Basic $ 0.27 $ 0.20 $ 0.48 $ 0.34 Diluted $ 0.27 $ 0.20 $ 0.48 $ 0.34 FFO per share3: Basic $ 0.41 $ 0.32 $ 0.80 $ 0.60 Diluted $ 0.41 $ 0.32 $ 0.79 $ 0.60 Core FFO per share3: Basic $ 0.41 $ 0.35 $ 0.81 $ 0.64 Diluted $ 0.41 $ 0.35 $ 0.81 $ 0.64 AFFO per share3: Basic $ 0.38 $ 0.34 $ 0.77 $ 0.62 Diluted $ 0.38 $ 0.34 $ 0.76 $ 0.62


 
Supplemental Financial and Operating Information | As of June 30, 20224 Financial Summary Consolidated Balance Sheets (in thousands, except share and per share amounts) June 30, 2022 December 31, 2021 ASSETS (unaudited) (audited) Investments: Real estate investments, at cost: Land and improvements $ 1,124,147 $ 1,004,154 Building and improvements 2,212,212 2,035,919 Lease incentive 14,005 13,950 Construction in progress 22,147 8,858 Intangible lease assets 86,575 87,959 Total real estate investments, at cost 3,459,086 3,150,840 Less: accumulated depreciation and amortization (238,402) (200,152) Total real estate investments, net 3,220,684 2,950,688 Loans and direct financing lease receivables, net 194,963 189,287 Real estate investments held for sale, net 21,787 15,434 Net investments 3,437,434 3,155,409 Cash and cash equivalents 17,993 59,758 Restricted cash 8,221 — Straight-line rent receivable, net 70,741 57,990 Derivative assets 27,645 — Rent receivables, prepaid expenses and other assets, net 25,442 25,638 Total assets $ 3,587,476 $ 3,298,795 LIABILITIES AND EQUITY Unsecured term loans, net of deferred financing costs 628,209 626,983 Senior unsecured notes, net 395,005 394,723 Revolving credit facility 218,000 144,000 Intangible lease liabilities, net 12,305 12,693 Dividend payable 36,066 32,610 Derivative liabilities 123 11,838 Accrued liabilities and other payables 29,794 32,145 Total liabilities 1,319,502 1,254,992 Commitments and contingencies — — Stockholders' equity: Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of 6/30/22 and 12/31/21 — — Common stock, $0.01 par value; 500,000,000 authorized; 132,669,947 and 124,649,053 issued and outstanding as of 6/30/22 and 12/31/21, respectively 1,327 1,246 Additional paid-in capital 2,346,037 2,151,088 Distributions in excess of cumulative earnings (110,969) (100,982) Accumulated other comprehensive loss 24,134 (14,786) Total stockholders' equity 2,260,529 2,036,566 Non-controlling interests 7,445 7,237 Total equity 2,267,974 2,043,803 Total liabilities and equity $ 3,587,476 $ 3,298,795


 
Supplemental Financial and Operating Information | As of June 30, 20225 Financial Summary GAAP Reconciliations to EBITDAre, GAAP NOI, Cash NOI and Estimated Run Rate Metrics 1. These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all re-leasing activity, investments in and dispositions of real estate made during the three months ended June 30, 2022 had occurred on April 1, 2022. 2. Adjustment is made to exclude non-core expenses added back to compute Core FFO, our provision for loan losses and to eliminate the impact of seasonal fluctuation in certain non-cash compensation expense recorded in the period. 3. Adjustment excludes contingent rent (based on a percentage of the tenant's gross sales at the leased property) where payment is subject to exceeding a sales threshold specified in the lease and lease termination or loan prepayment fees, if any. Three Months Ended (unaudited, in thousands) June 30, 2022 Net income $ 35,812 Depreciation and amortization 22,074 Interest expense 9,190 Interest income (30) Income tax expense 275 EBITDA 67,321 Provision for impairment of real estate 6,258 Gain on dispositions of real estate, net (10,094) EBITDAre 63,485 Adjustment for current quarter re-leasing, acquisition and disposition activity1 2,497 Adjustment to exclude other non-core and non-recurring activity2 (58) Adjustment to exclude termination/prepayment fees and certain percentage rent3 (276) Adjusted EBITDAre - Current Estimated Run Rate 65,648 General and administrative 7,026 Adjusted net operating income ("NOI") 72,674 Straight-line rental revenue, net1 (5,787) Other amortization expense 208 Adjusted Cash NOI $ 67,095 Annualized EBITDAre $ 253,940 Annualized Adjusted EBITDAre $ 262,592 Annualized Adjusted NOI $ 290,696 Annualized Adjusted Cash NOI $ 268,380


 
Supplemental Financial and Operating Information | As of June 30, 20226 Financial Summary Market Capitalization, Debt Summary and Leverage Metrics 1. Our revolving credit facility provides a maximum aggregate initial original principal amount of up to $600 million and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $600 million. 2. Common equity & units as of June 30, 2022, based on 132,669,947 common shares outstanding (including unvested restricted share awards) and 553,847 OP units held by non-controlling interests. (dollars in thousands, except share and per share amounts) June 30, 2022 Rate Maturity Unsecured debt: $200mm term loan $ 200,000 3.3% 1.8 years $430mm term loan 430,000 2.5% 4.6 years Senior Unsecured Notes 400,000 3.1% 9.0 years Revolving credit facility1 218,000 2.5% 3.6 years Total unsecured debt $ 1,248,000 2.8% 5.4 years Gross debt $ 1,248,000 2.8% 5.4 years Less: cash & cash equivalents (17,993) Less: restricted cash available for future investment (8,221) Net debt $ 1,221,786 Equity: Preferred stock $ — Common stock & OP units (133,223,794 shares @ $21.49/share as of 6/30/22)2 2,862,979 Total equity $ 2,862,979 Total enterprise value ("TEV") $ 4,084,765 Net Debt / TEV 29.9% Net Debt / Annualized Adjusted EBITDAre 4.7x


 
Supplemental Financial and Operating Information | As of June 30, 20227 Net Investment Activity Investment Summary 1. Includes investments in mortgage loans receivable. 2. Cash ABR for the first full month after the investment divided by the gross investment in the property plus transaction costs. 3. GAAP rent and interest income for the first twelve months after the investment divided by the gross investment in the property plus transaction costs. 4. As a percentage of cash ABR for the quarter. 5. Includes investments in mortgage loan receivables collateralized by more than one property. 6. Includes investments in mortgage loans receivable made in support of sale-leaseback transactions. Investments1 3Q’20 4Q’20 1Q’21 2Q'21 3Q'21 4Q'21 1Q’22 2Q’22 Number of Transactions 19 33 22 34 31 55 23 23 Property Count 50 108 74 94 85 96 105 39 Avg. Investment per Unit (in 000s) $2,866 $2,218 $2,650 $2,354 $2,676 $3,230 $2,187 $3,870 Cash Cap Rates2 7.1% 7.1% 7.0% 7.1% 7.0% 6.9% 7.0% 7.0% GAAP Cap Rates3 7.9% 7.7% 7.9% 7.8% 7.9% 7.8% 7.8% 8.0% Master Lease %4,5 79% 89% 79% 83% 80% 59% 83% 86% Sale-Leaseback %4,6 92% 88% 85% 88% 84% 96% 100% 100% Existing Relationship %4 98% 89% 81% 97% 81% 89% 83% 79% % of Financial Reporting4 100% 100% 100% 100% 100% 98% 100% 100% Rent Coverage Ratio 2.8x 3.6x 3.0x 2.7x 2.8x 3.0x 3.3x 2.7x Lease Term Years 17.6 16.3 16.1 13.5 16.4 16.3 15.0 17.2 $148,877 $244,078 $197,816 $223,186 $230,755 $322,203 $237,795 $175,738 $0 $40,000 $80,000 $120,000 $160,000 $200,000 $240,000 $280,000 $320,000 $360,000 In v e s tm e n t A c ti v it y ( $ 0 0 0 s )


 
Supplemental Financial and Operating Information | As of June 30, 20228 Net Investment Activity Disposition Summary 1. Includes the impact of transaction costs. 2. Gains/(losses) based on our initial purchase price. 3. Cash ABR at time of sale divided by gross sale price (excluding transaction costs) for the property. 4. Property count excludes dispositions of undeveloped land parcels or dispositions where only a portion of the owned parcel is sold. 5. Excludes properties sold pursuant to an existing tenant purchase option. Dispositions 3Q’20 4Q’20 1Q’21 2Q'21 3Q'21 4Q'21 1Q’22 2Q’22 Realized Gain/(Loss)1,2 (4.5%) (10.2%) 4.5% (7.3%) 29.8%5 7.5% 0.4% 38.6% Cash Cap Rate on Leased Assets3 7.0% 7.4% 7.1% 7.1% 6.5%5 6.0% 7.1%5 6.2% Leased Properties Sold4 11 21 15 6 11 2 6 8 Vacant Properties Sold4 3 2 1 1 -- -- -- -- Rent Coverage Ratio 2.2x 2.3x 1.8x 1.8x 1.2x 0.0x 2.5x5 1.1x $19,595 $39,042 $25,197 $19,578 $10,089 $4,466 $18,443 $26,091 $0 $10,000 $20,000 $30,000 $40,000 D is p o s it io n A c ti v it y ( $ 0 0 0 s )1


 
Supplemental Financial and Operating Information | As of June 30, 20229 Portfolio Summary Portfolio Highlights Investment Properties (#)1 1,561 Square Footage (mm) 14.4 Tenants (#) 322 Concepts (#) 469 Industries (#) 16 States (#) 46 Weighted Average Remaining Lease Term (Years) 13.8 Triple-Net Leases (% of Cash ABR) 94.8% Master Leases (% of Cash ABR) 63.8% Sale-Leaseback (% of Cash ABR)2,3 86.5% Unit-Level Rent Coverage 4.0x Unit-Level Financial Reporting (% of Cash ABR) 98.5% Leased (%) 99.9% Top 10 Tenants (% of Cash ABR) 19.0% Average Investment Per Property ($mm) $2.3 Total Cash ABR ($mm) $267.1 1. Includes 162 properties that secure mortgage loans receivable. 2. Exclusive of our Initial Portfolio. 3. Includes investments in mortgage loans receivable made in support of sale-leaseback transactions. As of June 30, 2022


 
Supplemental Financial and Operating Information | As of June 30, 202210 Portfolio Summary Tenant and Industry Diversification Top 10 Tenants1 Properties2 % of Cash ABR 28 3.2% 75 2.0% 16 1.8% 23 1.8% 9 1.7% 5 1.7% 17 1.7% 6 1.7% 13 1.7% 5 1.7% Top 10 Tenants 197 19.0% Total 1,559 100.0% Top 10 Tenants Diversification by Industry 1. Represents tenant, guarantor or parent company. 2. Property count includes 162 properties that secure mortgage loans receivable and excludes two vacant properties. 3. Calculation excludes properties with no annualized base rent and properties under construction. Tenant Industry Type of Business Cash ABR ($'000s) % of Cash ABR # of Properties2 Building SqFt Rent Per SqFt3 Early Childhood Education Service $ 36,528 13.7% 165 1,741,814 $ 20.84 Quick Service Service 34,398 12.9% 416 1,152,111 29.89 Car Washes Service 31,166 11.7% 107 569,963 54.68 Medical / Dental Service 30,062 11.3% 181 1,225,768 24.52 Automotive Service Service 22,990 8.6% 176 1,101,491 20.70 Casual Dining Service 16,263 6.1% 98 574,882 27.42 Convenience Stores Service 14,811 5.5% 133 507,873 29.32 Equipment Rental and Sales Service 11,532 4.3% 45 812,666 13.56 Other Services Service 5,409 2.0% 24 282,390 19.15 Pet Care Services Service 4,849 1.8% 46 371,069 14.35 Family Dining Service 4,665 1.7% 32 179,942 25.94 Service Subtotal $ 212,673 79.6% 1,423 8,519,969 $ 24.93 Entertainment Experience 19,989 7.5% 38 1,074,782 19.51 Health and Fitness Experience 11,544 4.3% 28 1,045,772 10.29 Movie Theatres Experience 4,301 1.6% 6 293,206 14.67 Experience Subtotal $ 35,834 13.4% 72 2,413,760 $ 14.86 Grocery Retail 9,610 3.6% 28 1,341,200 7.17 Home Furnishings Retail 2,049 0.8% 4 217,339 9.42 Retail Subtotal $ 11,659 4.4% 32 1,558,539 $ 7.48 Building Materials Industrial 3,801 1.4% 23 1,257,017 3.02 Other Industrial Industrial 3,142 1.2% 9 647,533 4.85 Industrial Subtotal $ 6,943 2.6% 32 1,904,550 $ 3.65 Total $ 267,109 100.0% 1,559 14,396,818 $ 18.52


 
Supplemental Financial and Operating Information | As of June 30, 202211 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5 2 0 2 6 2 0 2 7 2 0 2 8 2 0 2 9 2 0 3 0 2 0 3 1 2 0 3 2 2 0 3 3 2 0 3 4 2 0 3 5 2 0 3 6 2 0 3 7 2 0 3 8 T h e re a ft e r % o f C a s h A B R < 1.00x 1.00 to 1.49x 1.50 to 1.99x ≥ 2.00x NR 32.9% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% C C C + B - B B + B B - B B B B + B B B - B B B B B B + A - A A + A A - % o f C a s h A B R < 1.00x 1.00 to 1.49x 1.50 to 1.99x ≥ 2.00x NR Portfolio Summary Portfolio Health Tenant Financial Reporting Requirements % of Cash ABR by Unit-Level Coverage Tranche1 Unit-Level Coverage by Lease ExpirationUnit-Level Coverage by Tenant Credit2 Note: ‘NR’ means not reported. 1. Certain tenants, whose leases do not require unit-level financial reporting, provide the Company with unit-level financial information. The data shown includes unit-level coverage for these leases. 2. The chart illustrates the portions of annualized base rent as of June 30, 2022, attributable to leases with tenants having specified implied credit ratings based on their Moody’s RiskCalc scores. Moody’s equates the EDF scores generated using RiskCalc with a corresponding credit rating. Reporting Requirements % of Cash ABR Unit-Level Financial Information 98.5% Corporate-Level Financial Reporting 98.8% Both Unit-Level and Corporate-Level Financial Information 98.4% No Financial Information 1.1% Rent Coverage Ratio (x) Rent Coverage Ratio (x) ≥ 2.00x 75.3% Not Reported 1.4% 1.50x to 1.99x 11.0% 1.00x to 1.49x 5.9% < 1.00x 6.4%


 
Supplemental Financial and Operating Information | As of June 30, 202212 Cash % of # of Wgt. Avg. Lease Terminated Leases Re-Leased Total Year1 ABR Cash ABR Properties2 Coverage3 $(000)s Renewals Without Vacancy After Vacancy Leasing 2022 492 0.2% 5 3.0x Prior Cash ABR $ 212 $ 693 1,548 $ 2,452 2023 1,434 0.5% 15 2.9x New Cash ABR4 214 801 751 1,764 2024 4,881 1.8% 47 5.8x Recovery Rate 100.0% 115.6% 48.5% 71.9% 2025 2,236 0.8% 19 2.1x Number of Leases 1 12 4 17 2026 2,719 1.0% 17 1.6x Average Months Vacant — — 6.9 — 2027 7,639 2.9% 80 2.7x % of Total Cash ABR5 0.1% 0.3% 0.3% 0.7% 2028 3,915 1.5% 12 1.9x 2029 5,906 2.2% 80 4.2x 2030 4,396 1.6% 48 7.0x 2031 13,864 5.2% 85 2.7x 2032 9,430 3.5% 39 4.9x Vacant Properties at March 31, 2022 0 2033 8,022 3.0% 26 3.5x Expiration Activity — 2034 26,863 10.1% 206 6.2x Lease Termination +9 2035 14,439 5.4% 98 4.8x Vacant Property Sales — 2036 40,497 15.2% 180 3.6x Lease Activity -7 2037 19,407 7.3% 96 8.7x Vacant Properties at June 30, 2022 2 2038 13,223 5.0% 81 2.1x 2039 20,772 7.8% 104 3.8x 2040 32,348 12.1% 152 2.9x 2041 22,104 8.3% 113 2.4x Thereafter 12,522 4.6% 56 2.6x Total $267,109 100.0% 1,559 4.0x Leasing Summary Leasing Expiration Schedule, Leasing Activity and Statistics 1. Expiration year of contracts in place as of June 30, 2022, excluding any tenant option renewal periods that have not been exercised. 2. Property count includes 162 properties that secure mortgage loans receivable but excludes two vacant properties. 3. Weighted by cash ABR as of June 30, 2022. 4. New cash ABR reflects full lease rental rate without giving effect to free rent or discounted rent periods. 5. New cash ABR divided by total cash ABR as of June 30, 2022. Annual Lease Expiration by Cash ABR Leasing Activity – Trailing 12 Months Leasing Statistics


 
Supplemental Financial and Operating Information | As of June 30, 202213 Leasing Summary Same-Store Analysis Same-Store Portfolio: All properties owned, excluding new sites under construction, for the entire same-store measurement period, which is March 31, 2021, through June 30, 2022. The same- store portfolio for 2Q’22 is comprised of 1,225 properties and represents 74% of our total portfolio as measured by contractual cash rent and interest divided by our cash ABR at June 30, 2022. Contractual Cash Rent: The amount of cash rent and interest our tenants are contractually obligated to pay per the in-place lease or mortgage as of June 30, 2022; excludes 1.) percentage rent that is subject to sales breakpoints per the lease and 2.) redevelopment properties in a free rent period. Defined Terms Same-Store Portfolio Performance Contractual Cash Rent ($000s) % Type of Business 2Q’22 2Q’21 Change Service $ 41,296 $ 40,605 1.7% Experience 5,710 5,507 3.7% Retail 1,754 1,741 0.7% Industrial 950 937 1.4% Total Same-Store Rent $ 49,709 $ 48,790 1.9%


 
Supplemental Financial and Operating Information | As of June 30, 202214 Leasing Summary Lease Escalations 1. Based on cash ABR as of June 30, 2022. 2. Represents the weighted average annual escalation rate of the entire portfolio as if all escalations occur annually. For leases in which rent escalates by the greater of a stated fixed percentage or CPI, we have assumed an escalation equal to the stated fixed percentage in the lease. As any future increase in CPI is unknowable at this time, we have not included an increase in the rent pursuant to these leases in the weighted average annual escalation rate presented. Lease Escalation Frequency Lease Escalation Type Weighted Average Lease Escalation Frequency % of Cash ABR Annual Escalation Rate1,2 Annually 78.3% 1.5% Every 2 years 1.5 1.5 Every 3 years 0.5 0.2 Every 4 years 0.3 1.0 Every 5 years 11.5 1.9 Other escalation frequencies 5.5 1.1 Flat 2.3 0.0 Total / Weighted Average 100.0% 1.5% Contractual Fixed 94.4% CPI 3.3% Flat 2.3%


 
Supplemental Financial and Operating Information | As of June 30, 202215 Glossary Supplemental Reporting Measures FFO, Core FFO and AFFO Our reported results are presented in accordance with U.S. generally accepted accounting principles ("GAAP"). We also disclose funds from operations (“FFO”), core funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”), each of which is a non-GAAP financial measures. We believe these non-GAAP financial measures are industry measures used by analysts and investors to compare the operating performance of REITs. We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO is used by management, and may be useful to investors and analysts, to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains and losses on sales (which are dependent on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions). We compute Core FFO by adjusting FFO, as defined by NAREIT, to exclude certain GAAP income and expense amounts that we believe are infrequent and unusual in nature and/or not related to our core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the equity REIT industry, and management believes that presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods and in comparison to the operating performance of our peers, because it removes the effect of unusual items that are not expected to impact our operating performance on an ongoing basis. Core FFO is used by management in evaluating the performance of our core business operations. Items included in calculating FFO that may be excluded in calculating Core FFO include items like certain transaction related gains, losses, income or expense or other non-core amounts as they occur. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to certain items that we believe are not indicative of our operating performance, including straight- line rental revenue, non-cash interest expense, non-cash compensation expense, other amortization and non-cash charges, capitalized interest expense and transaction costs. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We believe that AFFO is an additional useful supplemental measure for investors to consider to assess our operating performance without the distortions created by non-cash and certain other revenues and expenses. FFO, Core FFO and AFFO do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities, and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of FFO, Core FFO and AFFO may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.


 
Supplemental Financial and Operating Information | As of June 30, 202216 Glossary Supplemental Reporting Measures We also present our earnings before interest, taxes and depreciation and amortization for real estate (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) on sales of depreciable property and real estate impairment losses (“EBITDAre”), net debt, net operating income (“NOI”) and cash NOI (“Cash NOI”), all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are accepted industry measures used by analysts and investors to compare the operating performance of REITs. EBITDA and EBITDAre We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses. We present EBITDA and EBITDAre as they are measures commonly used in our industry and we believe that these measures are useful to investors and analysts because they provide important supplemental information concerning our operating performance, exclusive of certain non-cash and other costs. We use EBITDA and EBITDAre as measures of our operating performance and not as measures of liquidity. EBITDA and EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, the should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA and EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs. Net Debt We calculate our net debt as our gross debt (defined as total debt plus net deferred financing costs on our secured borrowings) less cash and cash equivalents and restricted cash available for future investment. We believe excluding cash and cash equivalents and restricted cash available for future investment, all of which could be used to repay debt, provides an estimate of the net contractual amount of borrowed capital to be repaid, which we believe is a beneficial disclosure to investors and analysts. NOI and Cash NOI We compute NOI as total revenues less property expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income or loss. Cash NOI further excludes non-cash items included in total revenues and property expenses, such as straight- line rental revenue and other amortization and non-cash charges. We believe NOI and Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis. NOI and Cash NOI are not measurements of financial performance under GAAP. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. Additionally, our computation of NOI and Cash NOI may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.


 
Supplemental Financial and Operating Information | As of June 30, 202217 Glossary Supplemental Reporting Measures Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI We further adjust EBITDAre, NOI and Cash NOI i) based on an estimate calculated as if all re-leasing, investment and disposition activity that took place during the quarter had been made on the first day of the quarter, ii) to exclude certain GAAP income and expense amounts that we believe are infrequent and unusual in nature and iii) to eliminate the impact of lease termination or loan prepayment fees and contingent rental revenue from our tenants which is subject to sales thresholds specified in the lease. We then annualize these estimates for the current quarter by multiplying them by four, which we believe provides a meaningful estimate of our current run rate for all investments as of the end of the current quarter. You should not unduly rely on these measures, as they are based on assumptions and estimates that may prove to be inaccurate. Our actual reported EBITDAre, NOI and Cash NOI for future periods may be significantly less than these estimates of current run rates. Cash ABR Cash ABR means annualized contractually specified cash base rent in effect as of the end of the current quarter for all of our leases (including those accounted for as direct financing leases) commenced as of that date and annualized cash interest on our mortgage loans receivable as of that date. Rent Coverage Ratio Rent coverage ratio means the ratio of tenant-reported or, when unavailable, management’s estimate based on tenant-reported financial information, annual EBITDA and cash rent attributable to the leased property (or properties, in the case of a master lease) to the annualized base rental obligation as of a specified date. Initial Portfolio Initial Portfolio means our acquisition of a portfolio of 262 net leased properties on June 16, 2016, consisting primarily of restaurants, that were being sold as part of the liquidation of General Electric Capital Corporation for an aggregate purchase price of $279.8 million (including transaction costs). GAAP Cap Rate GAAP Cap Rate means annualized rental income computed in accordance with GAAP for the first full month after investment divided by the purchase price, as applicable, for the property. Cash Cap Rate Cash Cap Rate means annualized contractually specified cash base rent for the first full month after investment or disposition divided by the purchase or sale price, as applicable, for the property. Disclaimer Essential Properties Realty Trust, Inc. and the Essential Properties Realty Trust REIT are not affiliated with or sponsored by Griffin Capital Essential Asset Operating Partnership, L.P. or the Griffin Capital Essential Asset REIT, information about which can be obtained at (https://www.gcear.com).